Key takeaways

• The average car payment for Americans is $451.89.
• 57% of people are holding onto their cars longer because of increased costs.
• 61% of people think it’s better to buy than lease a car.
• A third of Americans feel more comfortable negotiating car prices with a dealer than negotiating a pay raise at work.

On average, Americans pay $451.89 for their car each month, according to a new study from Empower. Nearly a third of drivers (29%) say their car payment is one of their biggest expenses, and a look at the car scene can give a view into why.

At the end of 2023, the average monthly car payment clocked in at $739, compared to $717 a year prior.¹ Now with interest rates at multi-decade highs in 2024, borrowing costs are taking a toll, with the average new-vehicle APR in the second quarter of this year rising to 7.3%.²

And borrowers have been on a fast track: Auto loans are the second-largest category of consumer debt in the U.S. – with people taking on $10 billion more in the second quarter of 2024 and owing more than $1.63 trillion.³

Driving forces

The majority of Americans (57%) are holding onto their cars longer, likely due to the increasing cost  of car ownership: A new car costs around $12,000 each year, accounting for factors like maintenance expenses, registration and fuel.⁴ Protecting that ride is coming at a new premium, too, as car insurance prices have risen more than 50% over the past four years.

People spent an average of $212 on gas in July 2024, according to Empower Personal Dashboard data, despite gas prices dropping 2.2% over the past year.⁵

Some 20% of people leased cars in 2023,⁶ and the majority of Americans prefer to take a different route. Empower research found that more than 3 in 5 people (61%) think it’s better to buy rather than lease a car.

Balancing buys

Despite the high costs, Millennials (42%) and Gen Xers (35%) say they’re more comfortable negotiating with a car dealer about the price of a vehicle, than negotiating a raise at work.

The time could be ripe for Americans to check their finances and flex their car-buying power: Incentives for buyers have increased by more than 80% over the past year, and higher inventories could benefit consumers looking to buy.⁷

Paving the way

For those concerned about the effects that rapid innovations are having on value, people may not be so quick to turn in their gear. Take phones, for example. Half of Americans say they don’t like to trade in their phone more often because of advances in technology (51%), according to Empower research.

As expenses change, tracking spending and payments doesn’t need to be an uphill battle. Accounting for car costs in a household budget can be an essential tool to manage money down the road.

About the study

The Empower “Buckle up” study is based on online survey responses from 1,160 Americans ages 18+ fielded by YouGov from June 14-16, 2024.